Table of Contents
Ultra Short Term Bond Funds
Ultra short term funds, earlier referred as Liquid Plus Funds, are funds that invest in debt instruments having residual maturities of more than 91 days and typically less than 1 year(in some cases they may go upto 1.5 years). Ultra Short Term Funds are short term investments that are highly suitable for investors who are willing to marginally increase the risk of investment to earn good returns. Essentially, Ultra short Funds invest in money market securities and other debt instruments of short maturities, however, the average portfolio maturity of these funds is generally little higher than that of Liquid Funds.
Also known as Cash or Treasury Management Funds, Ultra Short Term Funds generally offer good returns that other types of Debt fund (like Liquid Mutual Funds).
Ultra Short Term Bond Funds Features
Fund Type
Ultra-Short Term Funds are open-ended and the maturity period of funds varies from fund to fund. The maturity is very short(usually a couple of months) but longer than that of liquid funds. The investors can easily buy and sell the units of these funds as per the NAV (Net Asset Value) of the Redemption day.
NAV of Ultra Short Term Funds
For Ultra Short Term Funds, the purchase happens on a (T+0) Basis. This means that the NAV is fixed on the same day as the funds reach the AMC. For e.g. for an investor purchasing the fund within the cut-off time on a Tuesday (and funds being realised), the NAV date applicable would be Tuesday itself.
Exit Load of Ultra Short Term Bond Funds
Some Ultra Short Term Funds may have exit loads on exits made within very short periods of time (ranging from 7 days to 1 month). The period till which exit load applies may vary with funds. However, some ultra short terms funds do not have any exit loads also.
Returns of Ultra Short Term Funds
The returns may be paid to the investors in the form of Dividends (in the case of Dividend Funds) or in terms of appreciation of the fund NAV (in the case of Growth funds).
Redemption Ultra Short Term Funds
In the case of redemption, the process is the same for both liquid funds and Ultra Short Term Funds. For all redemption requests received by the AMC within the cut-off time (3 PM), the proceeds are paid to the customer the next day i.e. on a (T+1) basis. Albeit, if the request gets registered after 3 PM, the investors shall receive the redemption amount day after.
Minimum Amount of Investment
The minimum of Investing in Ultra Short Term Funds is INR 5,000 to 10,000 (on the retail plans).
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Investment Avenues of Ultra Short Mutual Funds
Ultra Short Term Funds are fixed Income investments that invest in money Market instruments like Treasury Bills but these may be 91-Day, 182-Day or 360-Day Treasury Bills. They can also invest in CDs and CPs having residual maturities longer than 91 days. Moreover, it is sometimes understood that there is no credit risk in such portfolios. However, this is not the case. Any short term investment like Ultra Short Funds can give a negative return as well if there is a Default. But, most companies delay payments on longer-dated Bonds before they start defaulting on short term debt (since this would lead a freeze in short term credit). Also, the investors need to carefully look at the portfolio in these funds to assess the quality of instruments and be ready to take that risk.
Why Invest in Best Ultra Short Term Funds?
Typically, the yield on a debt instrument is higher for instruments with longer maturities. Think of it as a way to reward the extra risk that investors take to be invested in the instruments for a longer period of time. In finance, this is called the liquidity premium Theory. Thus, securities in Ultra Short Mutual Funds usually earn a higher yield as compared to Liquid funds (albeit at a relatively higher risk). As a result, Ultra Short Term Funds may give marginally better returns than Liquid funds over comparable periods of time. So, make a sensible short-term investment in Mutual Funds by investing in Best Ultra Short term Mutual Funds to earn good returns with less volatility.
Taxation of Ultra Short Term Funds
In the below table, the returns of Ultra Short Bond Funds received in the form of a dividend are tax-free in the hands of investors.
However, a Dividend Distribution Tax (DDT) is deducted at the source by fund houses, which is 25% in case of Debt Funds like Ultra Short Term Funds.
| Liquid Funds | Liquid Funds | Ultra Short Funds | Ultra Short Funds | |
|---|---|---|---|---|
| Class of Investors | Individuals/HUF | Corporate | Individuals/HUF | Corporate |
| Dividend Distribution Tax | 27.038% | 32.445% | 13. 519% | 32.445% |
| Short Term Capital Gains | As per income tax Slab Rates | As per Income Tax Slab Rates | As per Income Tax Slab Rates | As per Income Tax Slab Rates |
(Please note, investors are advised to consult their Tax consultant before taking any decisions)
Best Performing Ultra Short Debt Funds to Invest FY 22 - 23
Below is the list of top funds have net assets over 100 Crore and managing assets for atleast 3 years.
Fund NAV Net Assets (Cr) 1 MO (%) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 5 YR (%) Franklin India Ultra Short Bond Fund - Super Institutional Plan Growth ₹34.9131
↑ 0.04 ₹297 0.6 1.3 5.9 13.7 8.8 8.7 Aditya Birla Sun Life Savings Fund Growth ₹449.618
↑ 0.18 ₹14,508 0.4 1.3 2.1 4.1 5.3 6.3 Nippon India Ultra Short Duration Fund Growth ₹3,349.5
↑ 0.77 ₹4,931 0.4 1.2 2.1 4.1 5.9 5 Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 7 Aug 22
To provide a combination of regular income and high liquidity by investing primarily in a mix of short term debt and money market instruments. Franklin India Ultra Short Bond Fund - Super Institutional Plan is a Debt - Ultrashort Bond fund was launched on 18 Dec 07. It is a fund with Moderate risk and has given a Below is the key information for Franklin India Ultra Short Bond Fund - Super Institutional Plan Returns up to 1 year are on The primary objective of the schemes is to generate regular income through investments in debt and money market instruments. Income maybe generated through the receipt of coupon payments or the purchase and sale of securities in the underlying portfolio. The schemes will under normal market conditions, invest its net assets in fixed income securities, money market instruments, cash and cash equivalents. Aditya Birla Sun Life Savings Fund is a Debt - Ultrashort Bond fund was launched on 16 Apr 03. It is a fund with Moderately Low risk and has given a Below is the key information for Aditya Birla Sun Life Savings Fund Returns up to 1 year are on (Erstwhile Reliance Liquid Fund - Cash Plan) The investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be made in Debt and Money Market Instruments. Nippon India Ultra Short Duration Fund is a Debt - Ultrashort Bond fund was launched on 7 Dec 01. It is a fund with Low risk and has given a Below is the key information for Nippon India Ultra Short Duration Fund Returns up to 1 year are on 1. Franklin India Ultra Short Bond Fund - Super Institutional Plan
CAGR/Annualized return of 8.9% since its launch. Return for 2021 was 11.9% , 2020 was 4% and 2019 was 9.6% . Franklin India Ultra Short Bond Fund - Super Institutional Plan
Growth Launch Date 18 Dec 07 NAV (07 Aug 22) ₹34.9131 ↑ 0.04 (0.11 %) Net Assets (Cr) ₹297 on 31 Jul 22 Category Debt - Ultrashort Bond AMC Franklin Templeton Asst Mgmt(IND)Pvt Ltd Rating ☆ Risk Moderate Expense Ratio 0.52 Sharpe Ratio 2.57 Information Ratio 0 Alpha Ratio 0 Min Investment 10,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 0% Effective Maturity 1 Year 15 Days Modified Duration Growth of 10,000 investment over the years.
Date Value 30 Sep 17 ₹10,000 30 Sep 18 ₹10,753 30 Sep 19 ₹11,834 30 Sep 20 ₹12,365 30 Sep 21 ₹13,522
Purchase not allowed Returns for Franklin India Ultra Short Bond Fund - Super Institutional Plan
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 7 Aug 22 Duration Returns 1 Month 0.6% 3 Month 1.3% 6 Month 5.9% 1 Year 13.7% 3 Year 8.8% 5 Year 8.7% 10 Year 15 Year Since launch 8.9% Historical performance (Yearly) on absolute basis
Year Returns 2021 11.9% 2020 4% 2019 9.6% 2018 8.7% 2017 8.2% 2016 9.7% 2015 9.7% 2014 10% 2013 10% 2012 10.3% Fund Manager information for Franklin India Ultra Short Bond Fund - Super Institutional Plan
Name Since Tenure Santosh Kamath 25 Oct 18 3.85 Yr. Pallab Roy 1 Jun 08 14.26 Yr. Data below for Franklin India Ultra Short Bond Fund - Super Institutional Plan as on 31 Jul 22
Asset Allocation
Asset Class Value Cash 100% Debt Sector Allocation
Sector Value Cash Equivalent 100% Credit Quality
Rating Value A 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity SBI Overnight Fund Dir Gr
Investment Fund | -100% ₹297 Cr 846,073
↓ -64 Call, Cash & Other Assets
Net Current Assets | -0% ₹0 Cr 2. Aditya Birla Sun Life Savings Fund
CAGR/Annualized return of 7.4% since its launch. Ranked 6 in Ultrashort Bond category. Return for 2021 was 3.9% , 2020 was 7% and 2019 was 8.5% . Aditya Birla Sun Life Savings Fund
Growth Launch Date 16 Apr 03 NAV (04 Oct 22) ₹449.618 ↑ 0.18 (0.04 %) Net Assets (Cr) ₹14,508 on 31 Aug 22 Category Debt - Ultrashort Bond AMC Birla Sun Life Asset Management Co Ltd Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 0.49 Sharpe Ratio -0.4 Information Ratio 0 Alpha Ratio 0 Min Investment 1,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 6.63% Effective Maturity 5 Months 19 Days Modified Duration 5 Months 12 Days Growth of 10,000 investment over the years.
Date Value 30 Sep 17 ₹10,000 30 Sep 18 ₹10,658 30 Sep 19 ₹11,627 30 Sep 20 ₹12,500 30 Sep 21 ₹13,044 30 Sep 22 ₹13,570 Returns for Aditya Birla Sun Life Savings Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 7 Aug 22 Duration Returns 1 Month 0.4% 3 Month 1.3% 6 Month 2.1% 1 Year 4.1% 3 Year 5.3% 5 Year 6.3% 10 Year 15 Year Since launch 7.4% Historical performance (Yearly) on absolute basis
Year Returns 2021 3.9% 2020 7% 2019 8.5% 2018 7.6% 2017 7.2% 2016 9.2% 2015 8.9% 2014 9.7% 2013 9.5% 2012 9.7% Fund Manager information for Aditya Birla Sun Life Savings Fund
Name Since Tenure Sunaina Cunha 14 Jun 14 8.22 Yr. Kaustubh Gupta 15 Jul 11 11.14 Yr. Monika Gandhi 22 Mar 21 1.44 Yr. Data below for Aditya Birla Sun Life Savings Fund as on 31 Aug 22
Asset Allocation
Asset Class Value Cash 64.02% Debt 35.98% Debt Sector Allocation
Sector Value Corporate 48.23% Cash Equivalent 28.76% Government 23.02% Credit Quality
Rating Value AA 14.27% AAA 85.73% Top Securities Holdings / Portfolio
Name Holding Value Quantity Housing Development Finance Corporation Ltd
Debentures | -4% ₹600 Cr 6,000 Shriram Transport Finance Company Limited
Debentures | -2% ₹281 Cr 2,750 Reliance Industries Limited
Debentures | -2% ₹256 Cr 2,500 Cholamandalam Investment And Fin. Co. Ltd
Debentures | -2% ₹250 Cr 2,500 08.54 MH Sdl 2023
Sovereign Bonds | -2% ₹248 Cr 24,500,000 Housing Development Finance Corporation Ltd
Debentures | -2% ₹245 Cr 2,450 08.21 HR UDAY 2023
Domestic Bonds | -2% ₹237 Cr 23,500,000 08.39 RJ UDAY 2023
Domestic Bonds | -1% ₹217 Cr 21,477,000 08.24 GJ Sdl 2023
Sovereign Bonds | -1% ₹212 Cr 21,000,000 08.48 KA Sdl 2022
Sovereign Bonds | -1% ₹200 Cr 20,000,000 3. Nippon India Ultra Short Duration Fund
CAGR/Annualized return of 6% since its launch. Ranked 62 in Ultrashort Bond category. Return for 2021 was 7.8% , 2020 was 4.9% and 2019 was 0.9% . Nippon India Ultra Short Duration Fund
Growth Launch Date 7 Dec 01 NAV (04 Oct 22) ₹3,349.5 ↑ 0.77 (0.02 %) Net Assets (Cr) ₹4,931 on 31 Aug 22 Category Debt - Ultrashort Bond AMC Nippon Life Asset Management Ltd. Rating ☆☆ Risk Low Expense Ratio 1.09 Sharpe Ratio -0.46 Information Ratio 0 Alpha Ratio 0 Min Investment 100 Min SIP Investment 100 Exit Load NIL Yield to Maturity 6.46% Effective Maturity 5 Months 1 Day Modified Duration 4 Months 12 Days Growth of 10,000 investment over the years.
Date Value 30 Sep 17 ₹10,000 30 Sep 18 ₹10,646 30 Sep 19 ₹10,771 30 Sep 20 ₹11,331 30 Sep 21 ₹12,295 30 Sep 22 ₹12,788 Returns for Nippon India Ultra Short Duration Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 7 Aug 22 Duration Returns 1 Month 0.4% 3 Month 1.2% 6 Month 2.1% 1 Year 4.1% 3 Year 5.9% 5 Year 5% 10 Year 15 Year Since launch 6% Historical performance (Yearly) on absolute basis
Year Returns 2021 7.8% 2020 4.9% 2019 0.9% 2018 7.3% 2017 5.8% 2016 6.8% 2015 7.6% 2014 8.4% 2013 8.5% 2012 9.2% Fund Manager information for Nippon India Ultra Short Duration Fund
Name Since Tenure Vivek Sharma 1 Oct 13 8.92 Yr. Kinjal Desai 25 May 18 4.27 Yr. Data below for Nippon India Ultra Short Duration Fund as on 31 Aug 22
Asset Allocation
Asset Class Value Cash 68.94% Debt 31.06% Debt Sector Allocation
Sector Value Corporate 42.55% Cash Equivalent 42.46% Government 14.99% Credit Quality
Rating Value AA 17.36% AAA 82.64% Top Securities Holdings / Portfolio
Name Holding Value Quantity 182 DTB 22122022
Sovereign Bonds | -4% ₹222 Cr 22,500,000 Tata Realty And Infrastructure Limited
Debentures | -3% ₹149 Cr 1,500 Indian Oil Corporation Limited
Debentures | -2% ₹105 Cr 1,050 Reliance Industries Limited
Debentures | -2% ₹102 Cr 1,000 Shriram Housing Finance Limited
Debentures | -2% ₹101 Cr 1,000 National Housing Bank
Debentures | -2% ₹100 Cr 1,000 Piramal Capital & Housing Finance Ltd
Debentures | -2% ₹94 Cr 838
↑ 838 Shriram Transport Finance Company Limited
Debentures | -2% ₹91 Cr 900 6.84% Govt Stock 2022
Sovereign Bonds | -2% ₹85 Cr 8,500,000 08.64 UP UDAY 2023
Domestic Bonds | -1% ₹73 Cr 7,200,000
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